A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

September 25, 2007

43 comments:

I'll bet that there will be a swing back once the bubbles pop in England and the other Euro Nations. If NYC is somewhere around the 10th most expensive city I assume that other countries were following our loan models also and have massive bubbles also.

Well...My dinner last night cost 1% more than two days before here in Zuri (as the locals call it). . .but, I will take a somewhat contrarian view - the FT had a piece about Airbus being paniced because Boeing Planes are now much cheaper than Euro priced Airbus planes. . .also an item about Oracle - when they have a 500Million Euro contract in France/Germany, etc. and bring those Euros home, it pumps up the earnings in the USA. . .

BUT - there are always winners and loosers - the loosers as usual - 80% of the American public who don't have international investments, and will pay more for gas, food, commodities, etc. while their house value sinks into the Tar Pits (a LA reference). The wealthy (except for hedge fund owners) will pocket a nice piece of change in foreign investments and commodity plays. . .I learned a long time ago as a small-fry investor - GO WITH THE BIG MONEY!. . .I own everything I can get in Rupies, Loonies, Euros, CHF, jeeze, even Mexican Pesos!!. . .

Ok evey morning for the last 4 months I have stopped for an Ice coffee @ Macdonald's (much better than Dunkin Dounuts by the way)$1.98...this morning that same Medium Ice Coffee was $2.25...yup things are sure looking UP!..

Where is the moron that said there was no inflation since Bush took office.....Ahh he just served me my coffee...good day sir.

The dollar is probably hitting it's low. Traditionally when we go into recession the dollar tanks, then pulls out as the rest of the world follows suit, as it certainly will in the next year. Don't burst a blood vessel over it Keith.

And for the commenter whose paying more for McDonalds coffee - wtf? What does that have to do with the dollar, inflation or anything? Hey CheezeWhiz was on sale locally, does that offset the price of your coffee?

Tough to not blow a blood vessel when the price of a pint at the pub just went up (again) in dollar terms because Ben Bernanke decided to kiss the ass of Angelo Mozilo versus do his job of protecting against inflation and maintaining a stable currency.

Expats feel the pain first. But folks in the States will feel it soon enough.

What you air heads are missing is the following: No paper currency is worth owning. All central banks are just creating more and more paper that they call money. I buy gold with all my excess cashflow.

Vote with your wallet, then! Maybe we can’t do much about the rising cost of gas, insurance, health care and other necessities, but sh1t, man – you sure can do something about that bumped-up coffee price.

Just say “no.” Don’t buy it. When the price of nonessentials jumps up, all you have to do is refuse to pay for them.

In the sound-money community you hear a lot about “the crossroad.” That's the point at which an overindebted country suddenly realizes that it has to choose between two (and only two) very different paths. One leads to deflation, with excess debt being purged from the system through mass-bankruptcy and falling prices. The other leads to inflation, with the debt being eliminated by lowering the value of the currency in which it’s paid off. It’s been clear for years that the U.S. was approaching this fork in the road. And last week, with the Fed chopping half a point from short term rates and promising more action as needed, we may have arrived. Whether inflating away this much debt is even possible remains to be seen, but that we’ll try looks certain.

Now the mainstream press is climbing aboard the metaphor. Today’s Wall Street Journal has a story featuring a nifty drawing of a rollercoaster with track that branches toward two equally forbidding tunnels. One is labeled inflation, the other deflation:

This inflationary pandemic parallels urbans obesity: when you are told it's enough, it seems still not enough for you. You keep chewing, munching, gobbling up all those expired and re-processed junk foods (CDOs, why don't GKOs come to mind?), collecting coke caps to win a trip to Iraq, citing deceptive body-weight indexes (insert some Mx aggregate and garbled inflation stats) to reassure yourself you are still fine, and that it hasn't gone pathologic, and that you'll definitely book a gym next week. Instead of a gym you find yourself one day hurried in an ambulance to learn of a host of diseases now preying on you. You end up being recycled in an environmentally-friendly way.

The money needs of seniors are unique and sometimes difficult to solve. Many websites provide helpful information (i.e. seniorresource.com, seniornet.com). However with an aging population the housing crunch is sure to make the situation worse. There needs to be some level of government help to allow these people to transition to an acceptable domicle to live out their years in peace and contentment.

And for the commenter whose paying more for McDonalds coffee - wtf? What does that have to do with the dollar, inflation or anything? Hey CheezeWhiz was on sale locally, does that offset the price of your coffee?

I guess the question is, can the dollar go down by itself or is this a case of the lifeboats getting pulled down with the Titanic.

I'm writing from Canada where people are all excited about the dollar being a parity to ours, but sh1t man, the joke will be on us really really soon when our exports dry up when Americans can't afford our products. First one to go is wood products for building McMansions. After that is cars. Right now we do 80% of our trade with the US. The last one to go will be oil and gold since other countries want that too, but I don't think it's going to be pretty for anybody.

An article in the Economist magazine points out that there are bubbles world-wide, and the US isn't the worst one. It's probably better that we're popping ours before it got to the levels of some of the leading countries. The US comes in at #9 on their list, the top countries are Sweden, UK, Australia, and France. A friend just came back from Bangalore, India, he says RE has exploded there, way worse than here in the SF bay area. 50% appreciation in 5 years?!? Hah! Try 100% appreciation in a year.

Comments on BB's actions that a friend sent me:The problem that has been developing over the past several months is one of confidence and liquidity. Because of potential problems in subprime mortgage portfolios, investors are afraid to lend to banks and banks are afraid to lend to one another. About a month ago the Fed had to intervene to keep the Federal Funds rate (interest rate on interbank loans in the Fed reserve-account system) from spiraling out of control. LIBOR rates are abnormally high relative to Treasury yields, when they should be closely matched. Investors have cut lines of credit they once extended to mortgage banks, either stopping their lending altogether or else bringing the mortgage lender to its knees by a margin call to test bank liquidity. The Fed tried to get banks to borrow directly from it (via the Discount Window) but that did not work. (Such borrowing only signals to private investors that the borrowing bank is having troubles, which will make them less likely to lend to that bank.) When Countrywide, the nation's largest mortgage lender, could no longer issue commercial paper to fund its lending operations, that caused shock waves throughout financial markets. Suddenly, no one was sure who to trust or who to lend to. These are uncharted waters and the contagion effect is world wide. At the time that the Countrywide crisis was unfolding, there were interventions by the French and European Central Banks to assist French and German banks that lost access to the commercial paper markets because of their investments in U.S. subprime mortgages. The Bank of England has stepped in to fully guarantee one of its banks to quell the sudden liquidity crisis. The Fed had to show decisive action in promoting liquidity for bank lending operations. Pushing down its target for the Federal Funds rate was the most direct and visible way to do this. It's previous back-room operations in the repo market were not enough. The downside risk of weak action is a potential financial crisis of a magnitude unseen since the Great Depression.

""If Pint is expensive, try Tsingtao, soon to become UK's top hits as per People's Daily."

I tried some of this at the weekend, came free with the Chinese takeaway. It was ok, nowt special, as for it becoming UKs top, there isn't a chance in hell of that ever happening."

Wasn't Fosters top for a while? Carling certainly was and that's only marginally better than the aussie piss. Never overestimate the English drinker! They all bought into wife beater being "reassuringly expensive" too, when in actual fact it's just Belgian piss with more alcohol in it. Tsingtao could well get to the top if enough C list wannabes are seen drinking it - i forsee it being the official beer sponsor of the next big brother!

There is no way for the middle class to escape inflation. They will have nothing left to invest overseas once they pay their food, energy, housing, healthcare costs. The rich will get richer as they have plenty of extra income to invest in the booming international market. Americans will be stuck like pigs being sucked down the drain

Stop spending $5 for a loaf of bread at Whole Foods and buy the same bread for $1.29 at Walmart. don't buy $4 cups of coffee at Elitist Asshole Bucks and instead make your own coffee that costs $7 a lb and can make 30 cups.

You liberals just love to complain about everything. Shut the fuck up, you sound ridiculous.

how do you solve the illegal immigration problem? just crash the almighty dollar and the illegals will realize that ain't worth a shit to come to america. they would rather go to china and india - the new super powers.

Keith wrote: > Expats feel the pain first. > But folks in the States will> feel it soon enough.>> At Wal-Mart.>Not true. I run a Chinese off-shore outsourcing business. Yes, the RMB will get stronger against the dollar, but it's controlled by the Chinese government and they will appreciate it gradually.

I already have. I can't take the rising coffee prices at either Starbucks or Tully's any more, so I bought a French press coffee pot, some ground coffee, and some chocolate rice milk. Now I make my own mocha in the morning to take to work in a thermos and it saves me a LOT of money....

when i could drink coffee before the high blood presure problems i have now, i would buy a 5 dollar can that lasted a month of continuous coffee drinking, and I still see 5 dollar cans, yet once i figured the ruskies might gene splice the mass productive tundra moss to mass produce beens...and by statistics for anti scientist brits, probably cause global cooling, yet i thought 5 bucks was exprnsive, as to starbucks 5 dollar a cup...screw you, you imbiciles...

What hurts me the worst with the dollar decline is that I had always planned to go traveling during my retirement and now I won't be able to afford to drive cross-country, let alone visit Europe and Asia. I should have traveled in my youth when travel abroad was way more afforable. There's nothing like 20/20 hindsight....

Won't a weak dollar make us more competitive? I know its hurting us on oil prices (and part of the reason for the high prices) but foreign countries are starting to invest in operations here. The Canadian who mentioned parity is a bad thing for Canada is right. The high value of the Euro is killing everyone outside of Germany that uses the currency. Ask Italy and France what they think of the Euro.

I'm not saying that there aren't problems right now or there won't be a recession, but this site sounds like my crank grandfather who blames the jews for everything. Do people here remember 21% interest rates? Gas lines? Unemployment over 10%? Price controls? Stagflation? This isn't 1979 or 1982 bad.